Rovnovsky Industries produces high-end flutes for professional musicians across the globe. Actual manufacturing overhead for the year was $1,240,000. The flexible budget indicated that fixed overhead should have been $800,000 and variable overhead should have been $400,000 for the number of flutes actually produced. Using a standard costing system, the company allocated $1,300,000 of overhead to production.
1. Calculate the total overhead variance. What does this tell managers?
2. Determine the overhead flexible budget variance. What does this tell managers?
3. Determine the production volume variance. What does this tell managers?